Starting up a business is tough; starting up a business is only for those who are willing to take the plunge into creating something that they passionately believe in. But all that is for the theorists. When it comes to the crunch and a startup falters, it becomes all about a failed dream, failed efforts and more often than not wasted resources. And if the startup had been initiated on borrowed funds, it means creditors lining up outside the door.
I am saying this because I too had gone the startup route, seen my venture plunging towards disaster but had managed to reverse the trend due to the expertise of consultants I took on board when things started getting out of hand. So I am definitely in a good position to write about the mistakes that should be avoided for a startup.
The first mistake that I made was to start beyond my means. I initiated a small scale business but thought that I could turn it into a large scale one in a very short time. I hired experts to help me out, professionals with technical qualifications to look after the production aspects and accountants to oversee the financial side without even generating enough vouchers to allot them a full day’s work. This resulted in substantial expenses on overheads in setting up infrastructure even before money had started rolling in a big way. What I should have done was to outsource a major part of these functions like accounts to consultants that would have done the same work at a fraction of the cost.
My second mistake was not having a business plan in place. True that I knew what I wanted from the business and what the final product would be. But business is much more than that. It is about working out future marketing and financial strategies so that you will have a ready blueprint for success. Alas, I didn’t even know that I would need so. My idea was to get a good product in place and let my sixth sense guide my business on a daily basis. Result? Soon I found that there was a short fall in cash flow and working capital requirements and began to face difficulties in keeping the production lines rolling.
It was at this time that I decided to opt for qualified assistance. I hired reputed business consultants in Melbourne to get me out of this rut. They analysed my business and drew up a business plan that would optimise my operational efficiencies. The document they prepared accounted for all business parameters as well as projections and plans for future implementation. While they took care of the back office and operational aspects, I continued with overseeing production. This perfect balance helped my start up get out of the downturn but not before I had got the scare of my life.
My advice to startups and new entrepreneurs – start small without taking any grandiose steps that are not directly connected with the core activity. There will be time later to expand your non core functions and hire more staff when there is a high ROI and only when you can afford to do so.